RELATED AUDIO & VIDEO

This would allow the banks to reduce the size of deposit they require from borrowers, and still comply with new capital rules and loan to deposit ratios.

He said the details of such a scheme have yet to be worked out, but he believes it is a good idea, and it should be finalised in time for inclusion in the next finance bill.

Mr Noonan said the scheme would be restricted to first-time buyers of new build property only, it would cover only normal three and four-bed semi-detached homes, and it would be time limited.

The Taoiseach and the Tánaiste are expected to include an assessment of implementing a mortgage deposit insurance scheme as part of a wider package of measures to stimulate construction industry activity, which is due to be launched tomorrow.